A contractor operates a rock crusher and stores the material until needed in an adjacent stockpile area. The stockpile area is unpaved, and some of the produced material is contaminated by the sub-grade and cannot be used. The estimated stockpile losses are shown in Table 15-1. This equates to a combined loss of 8% each year. Table 15-1 Current Stockpile Losses Material Size Loss " minus 12%20% " minus & " x # 4 8%15% 1 " minus & 1 " x " 4%10% The contractor is considering paving the stockpile area to reduce the loss of material. Paving the stockpile area would reduce the losses due to contamination to about 2%. The crusher produces 250,000 tons/year at a cost of $1.50/ton. The new paving should last 10 years, and there is no salvage value. The paving will cover 4.56 acres. The previous stockpile losses will serve as sub-grade and base course for the new surfacing. A 3" thick surface will require 3700 tons of asphaltic Case 15 Pave the Stockpile Area? 95 concrete, which costs $20/ton installed since he can supply the material at his cost. The engineering and site work involve a one-time cost of about $5000. The surface requires routine maintenance costing about $1000/year. The contractor has estimated lower and upper limits for the data as shown in Table 15-2. Table 15-2 Lower and Upper Limits on Estimated Data Economic life 50% +100% Price/ton 20% +40% Tons/year 40% +20% Loss with paving 20% +20% Design cost for paving 10% +10% Maintenance 10% +20% First cost for paving 5% +10% 1. Determine the rate of return on the repaving, and recommend whether the contractor should pave the area? 2. Use breakeven charts or a spider plot to analyze which uncertainties could change your recommendation. 3. Construct a tornado diagram to summarize your results for management